VANCOUVER, Jan. 3 /PRNewswire-FirstCall/ - Inex Pharmaceuticals Corporation announced today that it has filed an information circular with securities regulators in Canada relating to the transaction announced on November 17, 2005 to spin-out its Targeted Immunotherapy technology and products into a new public company. The shareholder meeting to approve the transaction will take place January 26, 2006 and the transaction is expected to close March 1, 2006.
Timothy M. Ruane, President and Chief Executive Officer of INEX, said the reorganization transaction provides the greatest value forward for all stakeholders. “The two technology platforms at INEX, Targeted Chemotherapy and Targeted Immunotherapy, are at very different stages of development and have different funding and personnel requirements. We believe the two platforms are worth more to our stakeholders as independent entities than combined in one company and we encourage shareholders to vote in favour of the transaction.”
Under the transaction, INEX’s Targeted Immunotherapy assets and sufficient cash to support initial operations will be transferred to a new subsidiary company, Tekmira Pharmaceuticals Corporation (“Tekmira”). Tekmira will also assume all of the ongoing financial obligations associated with the assets acquired from INEX. In consideration for the transfer of these assets and assumption of the obligations, INEX will receive 11,640,921 common shares of Tekmira.
Of the 11,640,921 Tekmira common shares issued to INEX, 9,895,796 common shares will be distributed to shareholders of INEX pro rata to each holder’s shareholding in INEX (0.2566 common shares of Tekmira per INEX Share). The remaining 1,745,125 common shares of Tekmira will be held by INEX for issuance to holders of INEX’s convertible notes, if they choose to participate in the transaction. In addition, INEX will receive an additional 2,720,993 common shares of Tekmira in consideration for an additional $2.4 million. Therefore, upon completion of the transaction, INEX shareholders will own 69% of Tekmira and INEX will own 31% (subject to any distribution to the note holders). Tekmira will have a total of 14,361,914 common shares outstanding. The mechanics of the transaction are not expected to change before close; however, the final share distribution will depend on the timing of the close and changes in cash, working capital and other balances between the date hereof and the closing of the transaction.
Tekmira After the Transaction
Tekmira will commence operations with approximately $5.9 million in cash and will focus on advancing the Targeted Immunotherapy technology and its lead product, INX-0167. The Targeted Immunotherapy technology is based on the encapsulation of immunostimulatory oligonucleotides (short sequences of DNA) in liposomes and combines the immunostimulatory properties of oligonucleotides into a single synthetic particle. Preclinical studies have demonstrated that INX-0167 enhances the number and potency of certain immune cells, including natural killer (NK) cells. The resultant increase in NK cell activity is important for the enhancement of the potency of monoclonal antibodies through a mechanism known as antibody-dependent cell mediated cytotoxicity (ADCC).
Given the focus of Tekmira on advancing INX-0167 and INEX’s focus on partnering its Targeted Chemotherapy products, the majority of the INEX employees will be transferred to the new company. The major objectives of Tekmira will be to complete an equity financing in 2006, complete the preclinical development for INX-0167 and to file an Investigational New Drug application during 2007 to begin INX-0167 phase 1 trials.
INEX After the Transaction
Following the transaction, INEX will have approximately $4.3 million in cash and will continue its business plan to partner its Targeted Chemotherapy technology and products, including Marqibo(TM) (sphingosomal vincristine), INX-0125 (sphingosomal vinorelbine) and INX-0076 (sphingosomal topotecan). INEX will retain a small core team of employees to focus on partnering the Targeted Chemotherapy products and will enter into an agreement with Tekmira to provide access to support services, personnel, office space and equipment as required. At INEX’s considerably reduced burn rate, it is estimated that the cash on hand will fund the company’s activities until approximately June 2007. INEX will continue to meet all of the terms and conditions of the convertible debt.
Why INEX is Undertaking the Transaction
The transaction will strengthen INEX’s financial position and maximize the value of all of INEX’s assets. INEX’s Targeted Chemotherapy and Targeted Immunotherapy technology platforms have very different development, financial and personnel requirements, and thus INEX believes they require different business plans that are best pursued in separate companies.
INEX believes focusing on partnering to maximize the value of the Targeted Chemotherapy assets represents the company’s best opportunity to generate substantial cash in the near-term. The company believes it cannot raise capital in the equity markets given the potential future dilution that may result if its convertible notes are repaid in shares at maturity in April 2007.
In contrast to the Targeted Chemotherapy platform, the Targeted Immunotherapy platform is at an early-stage of development. These Targeted Immunotherapy assets will require substantial cash investments and a long development cycle and, therefore, if retained by INEX will represent a cash drain in the near-term. By transferring its Targeted Immunotherapy assets, and the majority of operating and employee obligations to a separate company, INEX will substantially reduce its cash burn rate and increase its relative cash position. INEX believes a separate, debt-free company, with no majority shareholder, has a better opportunity to obtain needed financing to develop the Targeted Immunotherapy platform to its full potential.
If the proposed transaction does not occur, and based on its current financial resources, INEX would probably consider a further restructuring to reduce its cash burn rate and would be unlikely to pursue the active development of its Targeted Immunotherapy assets.
Approvals
Implementation of the transaction is subject to the receipt of certain shareholder and court approvals. INEX has also applied to the Toronto Stock Exchange (TSX) for approval of the transaction, which approval is still pending. If approved by the TSX and following completion of the transaction, the continued listing of INEX’s common shares will be subject to, as is the case for all companies listed thereon, meeting the continued listing requirements of the TSX. To date, INEX has met these requirements, but there can be no assurance that it will be able to meet these requirements after completion of the transaction. Certain of these requirements, in particular, that INEX maintain a minimum market capitalization for 30 consecutive trading days, are out of INEX’s control and can be considered by the TSX at any time after completion of the transaction. If INEX is not able to continue to meet the continued listing requirements of the TSX, INEX will need to seek to list its shares on another stock exchange. There can be no assurance that such a listing could be obtained.
About INEX
INEX is a Canadian biopharmaceutical company developing and commercializing proprietary drugs and drug delivery systems to improve the treatment of cancer. Further information about INEX and this news release can be found at www.inexpharm.com.
Forward Looking Statements
There are forward-looking statements contained herein that are not based on historical fact, including without limitation statements containing the words “believes,” “may,” “plans,” “will,” “estimate,” “continue,” “anticipates,” “intends,” “expects,” and similar expressions. Such forward- looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, Inex’s stage of development, lack of product revenues, additional capital requirements, risks associated with the completion of clinical trials and obtaining regulatory approval to market Inex’s products, the ability to protect its intellectual property and dependence on collaborative partners. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments.
Contacts for Inex Pharmaceuticals Corporation Investors Ian Mortimer Vice President, Finance and Chief Financial Officer Phone: 604-419-3200 Media Karen Cook Boas James Hoggan & Associates Inc. Phone: 604-739-7500 Email: kcook@hoggan.com
INEX’s common shares are traded on the Toronto Stock Exchange under the trading symbol “IEX”.
Inex Pharmaceuticals Corporation
CONTACT: for Inex Pharmaceuticals Corporation: Investors, Ian Mortimer,Vice President, Finance and Chief Financial Officer, Phone: (604) 419-3200;Media, Karen Cook Boas, James Hoggan & Associates Inc., Phone: (604)739-7500, Email: kcook@hoggan.com